Financial results for the 53 weeks ended 29 December 2013

Massmart announced its full-year results for the 53 weeks ended 29 December 2013, reporting an increase in headline earnings of 29.9%, while operating profit grew 26%, boosted by the additional week’s sales and foreign exchange translation profit. Total sales increased 9.8% for the period, while comparable sales grew by 3.8%.

The Group is encouraged by sales in the first eight weeks ended 23 February 2014 which grew 9.5% while comparable sales are up 7.7%.

Commenting on the sales result for the first eight weeks, CEO Grant Pattison said: “The strong start suggests better prospects for 2014 compared to 2013. While we remain cautious about the state of the consumer, we are more positive about the business as we reap the rewards from the operational focus of last year.”

As the economic landscape is changing, so is the customer environment, particularly in Massmart’s historically core categories of General Merchandise and Wholesale Food. The change to tablets and smart phones, for example, is impacting on purchasing behaviour in categories such as photographic equipment, PCs and laptops.

According to Pattison a key strategic focus for the Group will be to diversify the sales mix and expand the company’s reach. “We will continue to prioritise the rollout and innovation of our Fresh offering; grow our home improvement store portfolio and expand our store footprint across sub-Saharan Africa.”

To this end, some new initiatives include the opening of a soft discount supermarket pilot store in Nigeria, ValueMart, which is trading well; launching George baby wear in 40 Game stores and a George Essentials range in 11 Game stores; launching two Builders Superstores last year with three stores planned for 2014, in Tembisa, Vosloorus and Protea Glen (Soweto).

Divisional performance

At Massdiscounters, which includes Game and DionWired, total sales for the 53-week period increased by 8.6%. Comparable sales for the 52-week period increased by 1.0% with product inflation of 0.5%.

The roll-out of dry groceries and Fresh continues with 48 Game stores now offering both these categories. Food sales growth in these comparable stores is exceptionally strong. Game Africa’s total Rand sales and sales in local currencies increased by 22.0% and by 14.7%, respectively.

DionWired’s total sales growth was 19.5% and this brand has become the destination store within this category.

Masswarehouse, which includes Makro, saw total sales increase by 14.4%. Comparable sales for the 52-week period increased by 4.0%. The new Alberton, Johannesburg store and the relocated Amanzimtoti, Durban store are trading well.

At Massbuild, which includes Builders Warehouse, Builders Express, Builders Trade Depot and Builders Superstore, total sales rose 11.9%, with comparable sales rising 8.2%. Massbuild made significant investments in its operating capacity this year: opening the highest number of stores ever; converting Builders Trade Depot onto a new IT platform; opening a national Distribution Centre in Johannesburg; opening two stores of the new format, Builders Superstore; and opening a new store in Botswana and Mozambique.

Total sales at Masscash, which includes Jumbo Cash & Carry, Rhino Cash & Carry, Shield (buying group) and Cambridge Food, increased by 6.5%. Comparable sales for the 52-week period increased by 3.8 % with product inflation of 4.2%. Trading in the Wholesale environment was difficult given the pressure on lower-income consumers, low product inflation and a very competitive market.

Commenting on the prospects for the year, Pattison said 2014 will see more clothing, more food retail, more low-income home improvement stores, more owned stores, new ecommerce offerings, some store rationalisation in over-traded markets, and continued investment in quality and safety.

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